Long-delayed German missile defense deal with Lockheed, MBDA expected by year’s end

A Medium Extended Air Defense System missile is launched to intercept a target during a MEADS test at White Sands Missile Range, New Mexico, on Nov. 29, 2012. (John Hamilton/White Sands Missile Range Public Affairs)

WASHINGTON — The long-delayed German medium-range air and missile defense deal with Lockheed Martin and MBDA is expected to be complete by roughly the end of 2018, according to Lockheed’s executive vice president in charge of the company’s missiles and fire control business.

And according to Frank St. John, that timeline has slipped by nearly two years.

“We will go through what I hope is a short negotiation process given the months that we’ve spent kind of preworking all of this. And then by the end of the calendar year or again shortly thereafter — these things never happen when you want them to — we will be under contract and will start the development of that,” St. John told Defense News in a March 5 interview at the company’s Arlington, Virginia, office.

The program in Germany is called TLVS and will include integration of Germany’s IRIS-T interceptors and the country’s own battle management system.

Lockheed Martin is expecting the German government to release a request for proposals by the end of the month — a formality since only Lockheed and its MBDA partner will submit a proposal in response.

Just putting together the proposal was a complex effort with many moving parts; so many moving part that while the team expected to deliver it by the summer in 2016, it did not submit a proposal until the end of September that year.

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The MEADS program remains in limbo since the end of the technology development program between Germany, Italy and the U.S. While MEADS was intended to replace the Army’s Patriot air and missile defense system, the U.S. ultimately decided it would not procure MEADS, but paid to close out the proof-of-concept phase that ended in successful intercept tests in 2012 and allowed the U.S. to have access to the technical data package of the system.

The total investment in the proof-of-concept was roughly $4 billion.

Bringing a version of MEADS to life in Germany appears to have encountered speed bumps. The German government said a year ago that it would not conclude a contract for the procurement of the air defense system before its September elections.

At the time, prime contractor MBDA’s proposal had yet to be finalized amid negotiations for MBDA and Lockheed to establish a joint venture for the implementation of TLVS/MEADS.

A defense policy spokesman of the Social Democrats in Germany’s parliament, the Bundestag, called for a stronger integration of Lockheed in the process because of teh firm’s expertise in system integration. It was also thought MBDA’s offer was incomplete and did not include Lockheed’s and Diehl’s missile systems in the deal.

Lockheed has been working with MBDA to structure a joint venture, St. John said, and that venture will respond to the impending RFP.

“It was very important for the German government that Lockheed Martin and MBDA be cooperative at the top line in responding to this requirement, and we are within a few days of having that joint-venture structure in place,” St. John said, adding that the companies have agreed on all major pieces and that “it’s now a paperwork process of getting it through the German filing process to start a new corporation, if you will.”

When asked about what appears to be a delay of nearly two years to get on contract, St. John said: “There are a couple of things that created the situation that we are in. One is this is a sole-source and the German process for doing a procurement of this magnitude sole-source is pretty deliberate, and they want to make sure they are getting exactly what they want and that they are getting it at exactly the right value. And so they are going through a pretty detailed process there.”

The government has experienced changes, he noted, and that also contributed to delays.

“They want to make sure that when they finally make the decision that they don’t have any regrets looking back,” St. John said.

Additionally, Lockheed originally proposed MEADS as it was developed by the U.S. government, St. John said. “Not everything about MEADS as it came out of U.S. development is exactly what the Germans wanted, and so there have been some detailed discussions about specific threats, specific interfaces, specific command and control unique to German use,” he said.

A missile defense shopping spree

While Lockheed continues to push for a MEADS success story in Germany, Raytheon has been closely watching the process play out. The country currently owns and operates Patriot systems, and Raytheon has proposed to the government an upgrade plan to its systems to provide the ability to detect and defeat threats from 360 degrees. The current Patriot system has blind spots.

Several years ago, Raytheon and Lockheed were jockeying for dominance in Europe as more countries in the region were in the market for medium-range air and missile defense systems.

Analysts thought that if Raytheon clinched a deal with Poland, other European countries would follow suit and buy the Patriot system. However, if Lockheed was able to bring MEADS online in Germany, other countries might want to buy that system, or elements of it, that could tie into Germany’s missile defense architecture.

Germany is a leader in European and NATO missile defense.

The U.S. government is expected to sign a contract with Poland for a first phase of Patriot procurement at the end of the month. And Raytheon has seen a surplus of other sales in Europe in the past several months. Romania has signed a deal for Patriot and Sweden has begun the process to buy the system, too.

It’s believed another European Patriot deal is on the verge of announcement, according to a Raytheon earnings call in January.

Despite the success in Patriot sales that Raytheon is seeing in Europe, Lockheed doesn’t believe it’s out of the game in the region.

“We don’t think that it is over with,” St. John said. “We went through a few skirmishes, we think that competition is going to continue, and that will result in better systems for the [U.S.] Army and better systems for international customers, and that is a good thing.”

The Army has also begun the process to competitively select a new 360-degree radar for its Integrated Air and Missile Defense system under development to replace the Patriot system.

“I think that the things that were discriminators for MEADS, namely that it was a 360-degree capability,” St. John said, “the fact that it was a modern system that didn’t suffer from the obsolescence issues with the Patriot system and the fact that it was an open architecture, that we could integrate with other countries’ interceptors, that could integrate other countries’ command and control, that could integrate into other countries’ radars, those things are still true, those things are still valid.”

Once Lockheed and MBDA are under contract to continue to develop TLVS/MEADS, St. John said, “we are going to see that interest continue.”

Jen Judson is the land warfare reporter for Defense News. She has covered defense in the Washington area for eight years. She was previously a reporter at Politico Pro Defense and Inside Defense. She won the National Press Club's best analytical reporting award in 2014 and was named the Defense Media Awards' best young defense journalist in 2018.